David Montgomery ruled out further major expansion at his European newspaper group, Mecom, yesterday, after rapid growth that has seen the company grow revenues to almost £1.4bn in less than three years.

Speaking to the Guardian as the group reported a 22% rise in operating profits, the Mecom executive chairman also accused the City of a "disproportionate" reaction to a trading update earlier in the year that led to a plunge in share price.

Montgomery, who was chief executive of Mirror Group Newspapers in the 1990s, said Mecom's acquisition strategy will now operate on a smaller scale.

"We are comfortable in the territories we are in," he said. "We are pursuing a fairly energetic [mergers and acquisitions] exercise from one month to the next, small things we can acquire that are contiguous or synergistic in print or online. But we're unlikely to go into another country in a big way in the near future."

Mecom - which operates in Germany, the Netherlands, Denmark, Norway and Poland - is looking to increase its online income because it believes the outlook for traditional advertising and circulation revenues is flat.

Montgomery said the company benefited from the subscription-based model of many European newspapers. He argued that it was partly because the City had judged Mecom against struggling UK newspaper publishers that its share price had been ailing in recent weeks. A trading update in January that omitted some financial details led to the share price falling 30% in one day, a decline from which it has not recovered.

"It was merely around an extra depreciation charge in 2008 and that led to a lot of confusion - I think the market was extremely sensitive at the time," he said. "It reacted disproportionately - actually, our plans for 2008 are very much on track and we're very confident."

Montgomery admitted that his multimedia plans have encountered resistance in Germany, where journalists learned of a €5m (£3.8m) cost-cutting plan and are complaining there has been an exodus of talent.

"We're trying to address the concern but it's not getting in the way of the physical reorganisation of the Berliner Zeitung - online and print will work side by side."

Montgomery added that there would be no change in the controversial arrangement which sees Josef Depenbrock combine the roles of editor-in-chief and chief executive of Mecom's German business.

"We would argue that the fact we have an experienced and distinguished editor-in-chief taking care of the transformation of the business is a safeguard to editorial quality," Montgomery said.

Mecom said operating profits on a like-for-like basis had risen 22% year on year to £120m in 2007, while revenues were up 3% to £1.35bn. However, Mecom reported a statutory pre-tax loss of £40m in 2007, compared with £24m the year before.

The group said it would switch its listing from the Aim market to the main London exchange on April 14, and it intended to start paying dividends.